Ethereum: How a potential squeeze could push ETH to $5,000

Key Takeaways

Ethereum outperformed other altcoin sectors as supply shrank and whale bets mounted. With transactions hitting records and ETH rebounding, the question remains: can this momentum spark a sustained rally?

Ethereum [ETH] traded higher on the daily chart, logging modest gains over the past 24 hours. The altcoin continued to steer the season, extending its outperformance against Bitcoin [BTC].

The altcoin’s rally has been fueled by whale and institutional accumulation, with retail also joining the train. Most of the altcoin sectors had, however, shifted back to closing in the red.

Ethereum vs. other altcoins

Comparing ETH to other altcoin sectors, it showed clear leadership this month. ETH led with a performance reading of 0.20, slightly higher than those of Layer 2s (L2) and DeFi tokens.

By mid-August, DeFi and L2s briefly led, but ETH reclaimed the lead into month-end. Naturally, DePin and AI tokens trailed just below.

Source: Glassnode

As Q3 2025 closed in, sectors such as gaming, AI, and staking posted losses. In fact, Ethereum stood out as the leader of capital rotation.

Ethereum price rebounds

On the weekly price action, ETH wicked to $4,900 before rejection. The spike signaled a potential rally, breaking a double top near $4,000.

Recent price action tested the $4,400 zone, a recovery from the dip below $4,300. As of press time, ETH was only up by about 13%.

Source: TradingView

If ETH advanced toward $4,800, large liquidation clusters could trigger resets. On top of that, $7.23 billion in ETH short positions risked a squeeze, potentially propelling the price toward $5,000.

Supply shrinks, whales bet big!

Additionally, the supply of Ethereum was shrinking with whales, institutions, and retail scooping up more ETH. In fact, staking contributed to the supply shock, with nearly 30% of ETH staked.

BlackRock reportedly accumulated nearly $1 billion worth of ETH over a week. Meanwhile, a whale went long on Hyperliquid with 25x leverage at $4,380, building a $4.39 million position, per CryptOpus.

More importantly, the monthly transaction count hit a new ATH of 46.99 million with still a day left. This was in play despite the month of August seeing a reduction in gains.

Source: Ted Pillows/X

DEX volume stood at $135 billion, while TVL reached $240 billion. Moreover, Active Addresses surpassed 15 million.

Altogether, Ethereum stayed ahead of its peers, with strong on-chain momentum reinforcing its dominance.